dudemonkey (42.26)

September 2009

5

CAPS is not a game that rewards a focused portfolio, one with a small number of securites that the investor understands well and firmly believes in. The math of CAPS scoring suggests that maxing out the number of picks that you have is the most successful strategy, whereas real life indicates that broad diversification often leads to average results. While there's nothing at all wrong with average results, there's no point in putting in the time and energy to learn about investing, security analysis, and to acquire an in-depth knowledge of business if average is what you're striving for.

My suggestion is this: allow users to green-thumb the same stock multiple times. I suppose there's no reason to disallow all-in shorting of stocks as well. The ceiling of 200 total picks isn't a bad one.

Warren Buffett did not become the best investor in history by buying 200 stocks. He and Charlie Munger have even said that if you were to take out their top 10 investments, they've have a fairly pedestrian track record. How many people really got rich on their 200th best idea? Probably not many, but there are plenty of examples of people who became wealthy with their best idea.

Given the complexity of the Motley Fool website and CAPS in particular, I expect that this type of feature would be possible to implement, as TMF clearly has access to an accomplished technical staff. As a web-developer-turned-systems-analyst, I can say that I'm constantly impressed with the performance, scalability, and bug-free nature of this free community, and that leads me to suspect that the TMF tech department is well-run and staffed with talent, and this sort of feature should be well within their reach. [more]